I am a Senior Fellow at the Cato Institute. A former Special Assistant to President Ronald Reagan, I also am a Senior Fellow in International Religious Persecution with the Institute on Religion and Public Policy. I am the author and editor of numerous books, including Foreign Follies: America's New Global Empire, The Politics of Plunder: Misgovernment in Washington, and Beyond Good Intentions: A Biblical View of Politics. I am a graduate of Florida State University and Stanford Law School.

A Bankrupt Uncle Sam Hypocritically Lectures Europe On Debt

Uncle Sam should declare bankruptcy. The government faces debts and unfunded liabilities on the order of $211 trillion, according to economist Laurence Kotlikoff. That’s about 15 times America’s official national debt—and GDP. Yet the Obama administration continues to lecture the rest of the world on how to get its economic house in order.

Europe’s worsening debt crisis, highlighted by the threat of default by Greece, was the top topic as finance ministers from around the world gathered in Washington for the annual International Monetary Fund meeting. Despite frantic European efforts to prop up the Athens government’s finances, investors have been fleeing to safer investments, driving German bond yields down to record lows. European governments remain divided, lacking answers and time.

President Barack Obama has been pressing European leaders, most importantly German Chancellor Angela Merkel, to follow his profligate policies in the U.S. Treasury Secretary Timothy Geithner even attended the recent European Union summit on the continent’s economic crisis to lobby his counterparts.

Geithner gave his hosts the benefit of his thinking whether they wanted it or not. Some did not. Maria Fekter, Austria’s finance minister, noted archly: “I found it peculiar that even though the Americans have significantly worse fundamental data than the Euro zone that they tell us what we should do.” Jean-Claude Juncker, both prime minister and finance minister of Luxembourg, declared: “We are not discussing the expansion or increase of the [financial stability fund] with a non-member of the Euro area.”

To be fair, the administration was not without something to say. But any advice should have been what not to do.

Don’t engage in counter-productive, large-scale bail-outs. Don’t waste hundreds of billions of dollars on ineffective “stimulus” programs. Don’t initiate massive new regulatory programs that create expense and uncertainty without addressing the most important causes of the last crisis. Don’t put off tough budget decisions involving domestic entitlements and military outlays.

However, that’s not what Secretary Geithner said. True, he admitted that “we’re not in a particularly strong position to provide advice to all of you.” But that didn’t stop him from doing so.

He warned of “catastrophic risk,” as if his European counterparts were blind and deaf. He insisted that “the big countries in Europe, the leaders in Europe must meet and take a decision on how to coordinate monetary integration with more effective coordinated fiscal policy,” as if the EU was a centralized nation state like America.

He told the other participants to act “decisively” even though the administration in which he serves has failed to address this country’s toughest spending issues. He urged the EU members to stimulate their individual economies and expand their continental bail-out fund, even though the Obama administration’s comparable domestic efforts have failed. The Europeans have the capacity to deal with their problems, he declared: they “just have to choose to do it.” As Americans have not done.

The Europeans face severe economic difficulties. Successive bail-outs increasingly seem unlikely to prevent default by Greece, which would threaten banks across the continent, including in Germany, heretofore Europe’s growth engine. Some investors worry about a reprise of the 2008 financial crisis.

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